FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 22 /POJK.04/2016

CONCERNING

LICENSING SEGMENTATION OF SECURITIES BROKERAGE INTERMEDIARY REPRESENTATIVES

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering: that in order to meet the industry's need for Securities Brokerage Intermediary Representatives for one or more functions in Securities Companies conducting business as Securities Brokerage Intermediaries, particularly in the marketing function, it is necessary to establish a Financial Services Authority Regulation concerning Licensing Segmentation of Securities Brokerage Intermediary Representatives;

Recalling:

1. Law Number 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
3. Financial Services Authority Regulation Number 27/POJK.04/2014 concerning Licensing of Securities Underwriting Agents and Securities Brokerage Intermediary Representatives (State Gazette of the Republic of Indonesia Year 2014 Number 362, Supplement to the State Gazette of the Republic of Indonesia Year 2014 Number 5636);

DECIDING:

To establish: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING LICENSING SEGMENTATION OF SECURITIES BROKERAGE INTERMEDIARY REPRESENTATIVES.

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Financial Services Authority Regulation, the following terms are defined as:

1. Securities Brokerage Intermediary Representative is an individual who acts on behalf of the interests of a Securities Company conducting business as a Securities Brokerage Intermediary.
2. Securities Brokerage Intermediary Marketing Representative is an individual who acts on behalf of the interests of a Securities Company conducting business as a Securities Brokerage Intermediary, who specifically performs the marketing function.
3. Securities Brokerage Intermediary Limited Marketing Representative is an individual who acts on behalf of the interests of a Securities Company conducting business as a Securities Brokerage Intermediary, who specifically performs the marketing function in a limited manner.
4. Individual license as a Securities Brokerage Intermediary Representative, hereinafter referred to as Securities Brokerage Intermediary Representative License, is a license granted by the Financial Services Authority to an individual to act on behalf of the interests of a Securities Company conducting business as a Securities Brokerage Intermediary.
5. Individual license as a Securities Brokerage Intermediary Marketing Representative, hereinafter referred to as Securities Brokerage Intermediary Marketing Representative License, is a license granted by the Financial Services Authority to an individual who acts on behalf of the interests of a Securities Company conducting business as a Securities Brokerage Intermediary, who specifically performs the marketing function.
6. Individual license as a Securities Brokerage Intermediary Limited Marketing Representative, hereinafter referred to as Securities Brokerage Intermediary Limited Marketing Representative License, is a license granted by the Financial Services Authority to an individual who acts on behalf of the interests of a Securities Company conducting business as a Securities Brokerage Intermediary, who specifically performs the marketing function in a limited manner.

CHAPTER II

LICENSING SEGMENTATION OF SECURITIES BROKERAGE INTERMEDIARY REPRESENTATIVES BASED ON THE FUNCTIONS OF THE SECURITIES COMPANY

Article 2

The Financial Services Authority may grant a Securities Brokerage Intermediary Representative license specifically for one (1) or more segmentation functions of a Securities Company conducting business as a Securities Brokerage Intermediary.

Article 3

The licensing segmentation of Securities Brokerage Intermediary Representatives specifically for the marketing function is conducted based on requirements and procedures regulated in this Financial Services Authority Regulation.

Article 4

The licensing segmentation of Securities Brokerage Intermediary Representatives specifically for the marketing function as referred to in Article 3 consists of:
a. Securities Brokerage Intermediary Marketing Representative License; and b. Securities Brokerage Intermediary Limited Marketing Representative License.

Article 5

The Securities Brokerage Intermediary Marketing Representative License and the Securities Brokerage Intermediary Limited Marketing Representative License as referred to in Article 4 cannot be used to fulfill the competency requirements for the directors of a Securities Company as regulated in the Financial Services Authority Regulation concerning Licensing of Securities Companies conducting business as Securities Underwriting Agents and Securities Brokerage Intermediaries.

CHAPTER III

SCOPE OF LICENSE FOR SECURITIES BROKERAGE INTERMEDIARY MARKETING REPRESENTATIVES AND SECURITIES BROKERAGE INTERMEDIARY LIMITED MARKETING REPRESENTATIVES

Article 6

(1) Securities Brokerage Intermediary Marketing Representatives and Securities Brokerage Intermediary Limited Marketing Representatives may only act on behalf of a Securities Company in performing the marketing function if they are employed by a Securities Company conducting business as a Securities Brokerage Intermediary. (2) Securities Brokerage Intermediary Marketing Representatives as referred to in paragraph (1) represent the Securities Company for:
a. making offers to prospective investors or the public to become clients of the Securities Company; b. applying the Customer Due Diligence Principle;
c. creating regular securities account opening contracts with clients;
d. creating financing securities account opening contracts with clients for clients receiving financing facilities; e. creating other securities account opening contracts with clients; f. receiving orders and/or instructions for the benefit of clients; and g. communicating with clients, including notifying clients after receiving notification from the information technology function in the event that the online communication system experiences delays or malfunctions. (3) Securities Brokerage Intermediary Limited Marketing Representatives as referred to in paragraph (1) represent the Securities Company for:
a. making offers to prospective investors or the public to become clients of the Securities Company; b. applying the Customer Due Diligence Principle;
c. creating regular securities account opening contracts with clients;
d. creating financing securities account opening contracts with clients for clients receiving financing facilities; and e. creating other securities account opening contracts with clients.

Article 7

(1) Individuals holding a Securities Brokerage Intermediary Marketing Representative License and individuals holding a Securities Brokerage Intermediary Limited Marketing Representative License who are not employed by a Securities Company may work at an institutional Securities Brokerage Intermediary Agent or act as an individual Securities Brokerage Intermediary Agent as referred to in the Financial Services Authority Regulation concerning Securities Brokerage Intermediary Agents. (2) The authority of individuals holding a Securities Brokerage Intermediary Marketing Representative License and individuals holding a Securities Brokerage Intermediary Limited Marketing Representative License who conduct activities as referred to in paragraph (1) is limited to the authority held by Securities Brokerage Intermediary Agents as referred to in the Financial Services Authority Regulation concerning Securities Brokerage Intermediary Agents.

Article 8

(1) Securities Brokerage Intermediary Marketing Representatives may only serve as the person in charge of the marketing function of a Securities Company conducting business as a Securities Brokerage Intermediary at locations other than the head office. (2) Securities Brokerage Intermediary Limited Marketing Representatives are prohibited from serving as the person in charge of the marketing function of a Securities Company conducting business as a Securities Brokerage Intermediary.

CHAPTER IV

LICENSING AND REQUIREMENTS FOR SECURITIES BROKERAGE INTERMEDIARY MARKETING REPRESENTATIVES AND SECURITIES BROKERAGE INTERMEDIARY LIMITED MARKETING REPRESENTATIVES

Article 9

Securities Brokerage Intermediary Marketing Representatives and Securities Brokerage Intermediary Limited Marketing Representatives must fulfill the following requirements:
a. Integrity requirements including:

1. having good character and morality;
2. having the legal capacity to perform legal acts;
3. never having committed disgraceful acts and/or being punished for proven criminal offenses in the financial services sector;
4. never having been subjected to license revocation, approval cancellation, and/or registration cancellation by the Financial Services Authority in the last 3 (three) years; and
5. having a high commitment to comply with laws and regulations;
   b. Competency requirements including:
6. having at least secondary education;
7. having adequate knowledge and expertise in the Capital Market sector, proven by holding a competency certificate:
   a) as a Securities Underwriting Agent, Securities Brokerage Intermediary Representative, or Securities Brokerage Intermediary Marketing Representative, for Securities Brokerage Intermediary Marketing Representatives; and b) as a Securities Underwriting Agent, Securities Brokerage Intermediary Representative, Securities Brokerage Intermediary Marketing Representative, or Securities Brokerage Intermediary Limited Marketing Representative, for Securities Brokerage Intermediary Limited Marketing Representatives, which are recognized by the Financial Services Authority and issued by a specialized Capital Market education institution based on a recommendation from the Standards Committee;
   c. being employed by a financial services institution in Indonesia, for foreign citizens; and
   d. not being employed by more than one (1) Securities Company, institutional Securities Brokerage Intermediary Agent, and/or other financial services institutions.

Article 10

The competency certificates as referred to in Article 9 letter b number 2 may be used for the application for Securities Brokerage Intermediary Marketing Representative Licenses and Securities Brokerage Intermediary Limited Marketing Representative Licenses as long as they are not older than 2 (two) years calculated from the date of issuance until the time of license application.

Article 11

Regulations regarding the procedures for license applications, license validity and renewal, obligations and prohibitions, the Standards Committee and associations, reporting, and license return, for Securities Brokerage Intermediary Representatives as referred to in Financial Services Authority Regulation Number 27/POJK.04/2014 concerning Licensing of Securities Underwriting Agents and Securities Brokerage Intermediary Representatives shall apply to Securities Brokerage Intermediary Marketing Representatives and Securities Brokerage Intermediary Limited Marketing Representatives, insofar as they are not otherwise regulated in this Financial Services Authority Regulation.

CHAPTER V

SANCTION PROVISIONS

Article 12

(1) Without prejudice to criminal provisions in the Capital Market sector, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties causing the violation, consisting of:
a. written warnings; b. fines, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business licenses; f. cancellation of approvals; and g. cancellation of registration.
(2) Administrative sanctions as referred to in paragraph (1) letter b, letter c, letter d, letter e, letter f, or letter g may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Fine sanctions as referred to in paragraph (1) letter b may be imposed separately or together with the imposition of sanctions as referred to in paragraph (1) letter c, letter d, letter e, letter f, or letter g.

Article 13

In addition to administrative sanctions as referred to in Article 12 paragraph (1), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 14

The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 12 paragraph (1) and specific actions as referred to in Article 13 to the public.

CHAPTER VI

CLOSING PROVISIONS

Article 15

This Financial Services Authority Regulation shall come into force on the date of its enactment.

To ensure that everyone is aware of it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on 22 April 2016

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY,

[signed]

MULIAMAN D. HADAD

Promulgated in Jakarta on 27 April 2016

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

[signed]

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 75

A copy in accordance with the original
Director of Law 1
Department of Law

[signed]
Yuliana

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 22 /POJK.04/2016

CONCERNING

LICENSING SEGMENTATION OF SECURITIES BROKERAGE INTERMEDIARY REPRESENTATIVES

I. GENERAL

In order to realize a financial system that grows sustainably and stably, the Financial Services Authority has the function of organizing an integrated regulatory and supervisory system for all activities in the financial services sector. In connection with its regulatory and supervisory functions, the Financial Services Authority always follows developments in global Capital Market trends in the era of globalization, which are increasingly developing without limits. One regulation of concern to the Financial Services Authority is related to improving the quality and quantity of human resources in the Capital Market sector, which needs to be enhanced, particularly Securities Brokerage Intermediary Representatives who are the forefront of Securities Company marketing.

Recognizing the important role of Securities Brokerage Intermediary Representatives, the Financial Services Authority has refined regulations regarding Securities Underwriting Agents and Securities Brokerage Intermediary Representatives by establishing Financial Services Authority Regulation Number 27/POJK.04/2014 concerning Licensing of Securities Underwriting Agents and Securities Brokerage Intermediary Representatives as an initial step to improve the quality of Securities Brokerage Intermediary Representative License holders.

The lack of quantity of human resources holding licenses as Securities Brokerage Intermediary Representatives, particularly to perform marketing functions, has become one of the obstacles faced by Securities Companies in developing their business, resulting in Securities Company activities at various locations and agencies not running smoothly. The broad scope of territory (geographical aspect) that must be reached by Securities Companies also becomes a barrier in market deepening steps, particularly to expand the Capital Market investor base. Therefore, the development of Securities Brokerage Intermediary Representatives must not stop at quality improvement alone, but also quantity improvement to meet the Capital Market industry's needs through a licensing segmentation scheme for Securities Brokerage Intermediary Representatives who specifically perform marketing functions.

II. ARTICLE BY ARTICLE EXPLANATION

Article 1
Clear enough.

Article 2
Clear enough.

Article 3
Clear enough.

Article 4
Clear enough.

Article 5
This provision is a logical consequence considering that the Securities Brokerage Intermediary Marketing Representative License and the Securities Brokerage Intermediary Limited Marketing Representative License are not equivalent to the Securities Brokerage Intermediary Representative License.

Article 6
Paragraph (1)
Clear enough.

Paragraph (2)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Letter f
Clear enough.

Letter g
In practice, online communication systems are commonly referred to as online.

Paragraph (3)
Clear enough.

Article 7
Clear enough.

Article 8
Clear enough.

Article 9
Letter a
Clear enough.

Letter b
Number 1
As regulated in Law Number 20 of 2013 concerning the National Education System, secondary education takes the form of Senior High School (SMA), Islamic Senior High School (MA), Vocational High School (SMK), and Islamic Vocational High School (MAK), or other equivalent forms.

Number 2
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Article 10
Clear enough.

Article 11
Clear enough.

Article 12
Clear enough.

Article 13
Clear enough.

Article 14
Clear enough.

Article 15
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5875